UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q



[X]      Quarterly Report Pursuant to Section 13 or 15(d) of
                    the Securities Exchange Act of 1934

For the quarterly period ended July 3, 2005



[ ]      Transition Report Pursuant to Section 13 or 15(d) of
                   the Securities Exchange Act of 1934

For the transition period from ____ to ____

Commission File Number 1-5109





TODD SHIPYARDS CORPORATION
      (Exact name of registrant as specified in its charter)



DELAWARE                       91-1506719
      (State or other jurisdiction of    (IRS Employer I.D. No.)
      incorporation or  organization)



1801- 16th AVENUE SW, SEATTLE, WASHINGTON   98134-1089
      (Street address of principal executive offices - Zip Code)

Registrant's telephone number: (206) 623-1635

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]     No



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.       Yes [X]        No



There were 5,423,156 shares of the corporation's $.01 par value common stock outstanding at August 8, 2005.

PART I - FINANCIAL INFORMATION

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995



Statements contained in this Report which are not historical facts or information are "forward-looking statements."  Words such as "believe," "expect," "intend," "will," "should," and other expressions that indicate future events and trends identify such forward-looking statements.  These forward-looking statements involve risks and uncertainties which could cause the outcome to be materially different than stated.  Such risks and uncertainties include both general economic risks and uncertainties and matters discussed in the Company's annual report on Form 10-K which relate directly to the Company's operations and properties.  The Company cautions that any forward-looking statement reflects only the belief of the Company or its management at the time the statement was made.  Although the Company believes such forward-looking statements are based upon reasonable assumptions, such assumptions may ultimately prove to be inaccurate or incomplete.  The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement was made.



ITEM 1.
FINANCIAL STATEMENTS
TODD SHIPYARDS CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGSPeriods Ended July 3, 2005 and June 27, 2004
(In thousands of dollars, except per share data)



|                                     | Three Months Ended                       
|------------------------------------ | -----------------------------------------
|                                     | 07/03/05                                 
|Revenues                             | $66,884                                  
|                                     |                                          
|Operating expenses:                  |                                          
|                                     | Cost of revenues                         
|                                     | Administrative and manufacturing overhead
|                                     | expenses                                 
|                                     | Other - insurance settlements            
|                                     | ------                                   
|Total operating expenses             | 63,446                                   
|                                     |                                          
|Operating income                     | 3,438                                    
|                                     |                                          
|Investment and other income          | 285                                      
|                                     |                                          
|Gain on sales of available-for-sale  |                                          
|                                     | securities                               
|                                     | -------                                  
|Income before income taxes           | 3,736                                    
|                                     |                                          
|Income tax expense                   | (1,273                                   
|                                     | -------                                  
|Net income                           | $ 2,463                                  
|                                     |                                          
|Net income per Common Share:         |                                          
|                                     | Basic                                    
|                                     | Diluted                                  
|                                     |                                          
|Dividends declared per Common Share  | $0.10                                    
|                                     |                                          
|Weighted Average Shares Outstanding: |                                          
|                                     | Basic                                    
|                                     | Diluted                                  
|                                     |                                          
|Retained earnings at beginning       |                                          
|                                     | of period                                
|                                     |                                          
|Net income for the period            | 2,463                                    
|                                     |                                          
|Dividends declared on common stock   | (543                                     
|                                     | __-------                                
|Retained earnings at end of period   | $88,659                                  
|                                     | =======                                  

The accompanying notes are an integral part of this statement.

TODD SHIPYARDS CORPORATION
CONSOLIDATED BALANCE SHEETSPeriods Ended July 3, 2005 and April 3, 2005(In thousands of dollars except share data)

|                                                 | 07/03/05                                    |         | 04/03/05 |        
|------------------------------------------------ | ------------------------------------------- | ------- | -------- | -------
|                                                 | (unaudited                                  | )       | (audited | )      
|ASSETS                                           |                                             |         |          |        
|Cash and cash equivalents                        | $  1,950                                    |         | $  3,823 |        
|Securities available-for-sale                    | 35,134                                      |         | 34,964   |        
|Accounts receivable, less allowance for          |                                             |         |          |        
|                                                 | doubtful accounts of $0 and $1              |         |          |        
|                                                 | U.S. Government                             | 13,868  |          | 12,922 
|                                                 | Other                                       | 8,579   |          | 4,742  
|Costs and estimated profits in excess of         |                                             |         |          |        
|                                                 | billings on incomplete contracts            | 15,060  |          | 12,815 
|Inventory, less obsolescence                     |                                             |         |          |        
|                                                 | reserve of $95 and $82                      | 1,416   |          | 1,408  
|Insurance receivable - current                   | 9,388                                       |         | 14,328   |        
|Other current assets                             | 1,234                                       |         | 1,625    |        
|Deferred taxes                                   | 1,249                                       |         | 1,002    |        
|                                                 | --------                                    | -       | -------- | -      
|Total current assets                             | 87,878                                      |         | 87,629   |        
|                                                 |                                             |         |          |        
|Property, plant and equipment, net               | 27,500                                      |         | 27,333   |        
|                                                 |                                             |         |          |        
|Restricted cash                                  | 2,965                                       |         | 2,919    |        
|Deferred pension asset                           | 27,931                                      |         | 28,127   |        
|Insurance receivable                             | 9,566                                       |         | 9,401    |        
|Other long-term assets                           | 1,041                                       |         | 1,042    |        
|                                                 | --------                                    | -       | -------- | -      
|Total assets                                     | $156,881                                    |         | $156,451 |        
|                                                 | ========                                    | =       | ======== | =      
|LIABILITIES AND STOCKHOLDERS' EQUITY:            |                                             |         |          |        
|Accounts payable and accruals                    | $ 23,401                                    |         | $ 19,730 |        
|Accrued payroll and related liabilities          | 2,725                                       |         | 3,149    |        
|Billings in excess of costs and estimated        |                                             |         |          |        
|                                                 | profits on incomplete contracts             | 646     |          | 1,527  
|Environmental and other reserves - current       | 9,457                                       |         | 14,328   |        
|Taxes payable other than income taxes            | 2,139                                       |         | 2,121    |        
|Income taxes payable                             | 1,708                                       |         | 579      |        
|                                                 | --------                                    | -       | -------- | -      
|Total current liabilities                        | 40,076                                      |         | 41,434   |        
|                                                 |                                             |         |          |        
|Environmental and other reserves                 | 12,310                                      |         | 12,408   |        
|Accrued post retirement health benefits          | 14,812                                      |         | 14,957   |        
|Deferred taxes                                   | 6,290                                       |         | 6,328    |        
|Other non-current liabilities                    | 2,495                                       |         | 2,517    |        
|                                                 | -------                                     | -       | -------  | -      
|Total liabilities                                | 75,983                                      |         | 77,644   |        
|                                                 |                                             |         |          |        
|Commitments and contingencies                    |                                             |         |          |        
|                                                 |                                             |         |          |        
|Stockholders' equity:                            |                                             |         |          |        
|Common stock $.01 par value-authorized           |                                             |         |          |        
|                                                 | 19,500,000 shares, issued 11,956,026 shares |         |          |        
|                                                 | at July 3, 2005 and April 3, 2005,          |         |          |        
|                                                 | and outstanding 5,423,156 at July 3, 2005   |         |          |        
|                                                 | and 5,423,156 at April 3, 2005              | 120     |          | 120    
|Paid-in capital                                  | 39,006                                      |         | 38,974   |        
|Retained earnings                                | 88,659                                      |         | 86,739   |        
|Accumulated other comprehensive income           | 140                                         |         | 1        |        
|Treasury stock (6,532,870 shares at July 3, 2005 |                                             |         |          |        
|                                                 | and April 3, 2005)                          | (47,027 | )        | (47,027
|                                                 | --------                                    | -       | -------- | -      
|Total stockholders' equity                       | 80,898                                      |         | 78,807   |        
|                                                 | --------                                    | -       | -------- | -      
|Total liabilities and stockholders' equity       | $156,881                                    |         | $156,451 |        
|                                                 | ========                                    | =       | ======== | =      

The accompanying notes are an integral part of this statement.

TODD SHIPYARDS CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWSPeriods Ended July 3, 2005 and June 27, 2004
(in thousands of dollars)

|                                                 | Three Months Ended                       
|------------------------------------------------ | -----------------------------------------
|                                                 | 07/03/05                                 
|OPERATING ACTIVITIES:                            |                                          
|Net income                                       | $  2,463                                 
|Adjustments to reconcile net income to net cash  |                                          
|                                                 | provided by operating activities:        
|                                                 | Depreciation                             
|                                                 | Loss on disposal of fixed assets         
|                                                 | Deferred pension cost                    
|                                                 | Post retirement health benefits          
|                                                 | Deferred income tax expense (benefit)    
|                                                 | Stock based compensation                 
|Decrease (increase) in operating assets:         |                                          
|                                                 | Accounts receivable                      
|                                                 | Costs and estimated profits in excess of 
|                                                 |                                          
|                                                 | Inventory                                
|                                                 | Insurance receivable                     
|                                                 | Other, net                               
|Increase (decrease) in operating liabilities:    |                                          
|                                                 | Accounts payable and accruals            
|                                                 | Accrued payroll and related liabilities  
|                                                 | Billings in excess of costs and estimated
|                                                 |                                          
|                                                 | Environmental and other reserves         
|                                                 | Income taxes payable                     
|                                                 | Other, net                               
|                                                 | ------                                   
|Net cash provided (used) by operating activities | (212                                     
|                                                 |                                          
|INVESTING ACTIVITIES:                            |                                          
|                                                 | Purchases of marketable securities       
|                                                 | Maturities of marketable securities      
|                                                 | Sales of marketable securities           
|                                                 | Capital expenditures                     
|                                                 | ------                                   
|Net cash used in investing activities            | (1,072                                   
|                                                 |                                          
|FINANCING ACTIVITIES:                            |                                          
|                                                 | Restricted cash (increase) decrease      
|                                                 | Purchase of treasury stock               
|                                                 | Proceeds from exercise of stock options  
|                                                 | Dividends paid on common stock           
|                                                 | ------                                   
|Net cash used in financing activities            | (589                                     
|                                                 |                                          
|Net increase (decrease) in cash and cash         |                                          
|                                                 | equivalents                              
|Cash and cash equivalents at beginning of year   | $3,823                                   
|Cash and cash equivalents at end of the period   | $1,950                                   

The accompanying notes are an integral part of this statement.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Todd Shipyards Corporation (the "Company") filed its Consolidated Financial Statements for the fiscal year ended April 3, 2005 with the Securities and Exchange Commission on Form 10-K.  The Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management's Discussion and Analysis contained in that report should be read in connection with this Form 10-Q.

1.  BASIS OF PRESENTATION

The accompanying Consolidated Financial Statements are unaudited but in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company's financial position and results of operations in accordance with accounting principles generally accepted in the United States applied on a consistent basis.  The accompanying consolidated balance sheet as of April 3, 2005 is derived from audited financial statements included in the Company's Annual Report on Form 10-K for the year then ended.



2.  NEW ACCOUNTING PRONOUNCEMENTS

On December 16, 2004, the FASB issued FASB Statement No.123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supercedes APB Opinion No.25, Accounting for Stock Issued to Employees,and amends FASB Statement No.95, Statement of Cash Flows.  Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123.  However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.  The SEC requires that Statement 123(R) be adopted in the first annual period beginning after June 15, 2005.  The Company will adopt Statement 123(R) on April 3, 2006. The Company plans to adopt Statement 123 using the "modified prospective" recognition method in which compensation cost is recognized beginning with the effective date, April 3, 2006, based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date.  The impact of adoption on the Company's financial statements is not expected to have a significant impact on the results of operations or financial position.



3.  REVENUES

The Company's first quarter revenue of $66.9 million reflects an increase of $34.8 million or 108% from the same period of fiscal year 2005.  The quarter to quarter increase is primarily attributable to work for the Navy on the NIMITZ CLASS Aircraft Carrier USS STENNIS and work on submarines under contracts with Electric Boat Company.



The ship repair business consists of individual and short duration repair events, some of which are exercised by the Government under its various multi-ship, multi-option contracts.  Consequently, operating results for any period presented are not necessarily indicative of results that may be expected in any other period.

4.  ENVIRONMENTAL AND OTHER RESERVES

As discussed in the Company's Form 10-K for the fiscal year ended April 3, 2005, the Company faces significant potential liabilities in connection with the alleged presence of hazardous waste materials at its Seattle shipyard and at two additional sites used by the Company for disposal of alleged hazardous waste.  Parties alleging damages from past exposure to toxic substances at Company facilities have also named the Company as a defendant in civil actions.

The Company continues to analyze environmental matters and associated liabilities for which it may be responsible.  No assurance can be given as to the existence or extent of any environmental liabilities until such analysis has been completed.  The eventual outcome of all environmental matters cannot be determined at this time; however, the analyses of the known matters have progressed sufficiently to warrant establishment of reserve provisions in the accompanying consolidated financial statements.

Harbor Island Site

In fiscal year 2001, the Company entered into a 30-year agreement with an insurance company that provides broad-based insurance coverage for the remediation of the Company's operable units at the Harbor Island Superfund Site ("Site").



The agreement provides coverage for the known liabilities in an amount not to exceed the policy limits.  As of July 3, 2005 these limits exceed the Company's current booked reserves of approximately $13.5 million.  Included in the reserves are sediment remediation costs for Harbor Island of $9.5 million that are expected to occur in the next 12 months.  These costs are reflected in the Company's balance sheet under current liabilities.  Likewise, the insurance receivable of $9.4 million relating to these reserves is reflected in the Company's balance sheet under current assets.



Additionally, in 2001 the Company entered into a 15-year agreement for coverage of any new environmental conditions discovered at the Seattle shipyard property that would require environmental remediation.



During the fourth quarter of fiscal year 2003, the Company and the EPA entered into a Consent Decree for the cleanup of the Shipyards Sediments Operable Unit (the "SSOU"), which, was subsequently approved by the Department of Justice. During the fourth quarter of fiscal year 2004 the Company submitted its Final Design Report to the EPA, which provides for the following actions to take place at the SSOU:



Piers 2 and 4 South (located on the Duwamish Waterway) will be demolished and removed from the site to achieve more complete cleanup in those areas.



Dredging of all contaminated sediments and shipyard waste in the open areas of the SSOU (surrounding the shipyard) and in the areas beneath Piers 2 and 4 South.  The total estimated volume of sediments to be removed is 195,200 cubic yards.



Disposal of all recovered sediment and shipyard waste at an appropriate upland disposal facility.



Backfilling of portions of the areas dredged to create inter-tidal habitat where feasible.



Capping of areas beneath the piers that are not scheduled for demolition to an average thickness of one foot.



Pursuant to the current schedule, remediation of the SSOU began in the second quarter of fiscal 2005.  Current environmental regulations limit the period of time during the year that dredging may occur.  Given these limits, dredging in the SSOU will require several years to accomplish.  The Company completed its first year of dredging during the fourth quarter of fiscal 2005. The Consent Decree requires that the Company be finished with the pier demolition and dredging in its entirety in fiscal year 2006.The current estimated cost of the SSOU cleanup is included in the environmental reserve.



Under the Federal Superfund law, potentially responsible parties may have liability for damages to natural resources in addition to liability for remediation.  During fiscal year 2003, the Company began discussions with the natural resource trustees ("Trustees") for the Site.  The Company anticipates that the Trustees will file a claim against the Company at some future date alleging damages to the natural resources at the Site caused by the release of hazardous substances.  The best estimate of the Company's natural resource damage liability is included in the environmental remediation reserve.  The payment of any eventual claim is covered by the aforementioned insurance policy, provided that aggregate policy limits have not been exceeded.



Other Environmental Sites

During the third quarter of fiscal year 2005, the Company, along with 55 other companies and organizations, was notified that it is a potentially responsible party at the BKK Landfill Facility in West Covina, California.  The site is the subject of an investigation and remedial order from the California Department of Toxic Substances Control.  It is alleged that the Company's San Pedro shipyard (closed in 1990) caused shipyard waste to be sent to the BKK Facility during the 1970s and 1980s.  The Company is investigating these allegations.



During the second quarter of fiscal year 2005, the Company was notified by the EPA that it is a potentially responsible party ("PRP") at the Malone Service Company Superfund Site ("Malone") in Galveston County, Texas.  The EPA alleges that the Company's Galveston shipyard, which ceased operations in 1990, was the generator of waste materials that were delivered, through independent transport companies, to the Malone site.  The EPA has further indicated that the Company will, based on volumes of material at the site believed to have been generated by the Company, be eligible to participate in a "de minimus" settlement for small contributors.  The Company has included its best estimate of the settlement amount in its environmental reserve.



Asbestos-Related Claims

As reported in the Company's Form 10-K for its fiscal year 2005, the Company has been named as a defendant in civil actions by parties alleging damages from past exposure to toxic substances, generally asbestos, at closed former Company facilities.



The cases generally include as defendants, in addition to the Company, other ship builders and repairers, ship owners, asbestos manufacturers, distributors and installers, and equipment manufacturers and arise from injuries or illnesses allegedly caused by exposure to asbestos or other toxic substances.  The Company assesses claims as they are filed and as the cases develop, analyzing them in two different categories based on severity of illness.  Based on current fact patterns, certain diseases including mesothelioma, lung cancer and fully developed asbestosis are categorized by the Company as "malignant" claims.  All others of a less medically serious nature are categorized as "non-malignant".  The Company is currently defending approximately 27 "malignant" claims and approximately 561 "non-malignant" claims.  The Company and its insurers are vigorously defending these actions.



As of July 3, 2005 the Company has recorded a bodily injury liability reserve of $7.4 million and a bodily injury insurance receivable of $5.5 million.  This compares to a previously recorded bodily injury reserve and insurance receivable of $7.3 million and $5.3 million, respectively, at April 3, 2005.  These bodily injury liabilities and receivables are classified within the Company's Consolidated Balance Sheets as environmental and other reserves, and insurance receivables, respectively.

Other Reserves

During the first quarter of fiscal year 2004, the Company recorded a reserve of $2.5 million related to the unanticipated bankruptcy of one of its previous insurance carriers.  The reserve, which reflects the Company's best estimate of the known liabilities associated with unpaid workers compensation claims arising from the two-year coverage period commencing October 1, 1998, is subject to change as additional facts are uncovered.  These claims have reverted to the Company due to the bankruptcy of the insurance carrier.  Although the Company expects to recover at least a portion of these costs from the carrier's liquidation and other sources, the amount and the timing of any such recovery cannot be estimated currently and therefore no estimate of amounts recoverable is included in the current financial results.



Since establishing the reserve, the Company has paid a cumulative total of approximately $502,000 and $470,000 in claims at July 3, 2005 and April 3, 2005, respectively, which have been charged against the reserve.



5.  COMPREHENSIVE INCOME

The Company reported comprehensive income of $2.6 million for the quarter ended July 3, 2005 which consisted of net income of $2.5 million and an increase in net unrealized gains on available-for-sale marketable securities of $0.1 million, which is recorded in accumulated other comprehensive income.

During the same period of fiscal year 2005, the Company reported comprehensive income of $0.9 million for the quarter ended June 27, 2004, which consisted of net income of $1.2 million offset by the change in net unrealized gains on available-for-sale marketable securities of $0.3 million, which is recorded in accumulated other comprehensive income.



6.  EARNINGS PER SHARE

The following table represents the calculation of net earnings per common equivalent share - diluted

|In thousands,           | Three Months Ended  
|----------------------- | --------------------
|(except per share data) | 07/03/05            
|                        |                     
|Net income              | $2,463              
|Weighted average common |                     
|shares outstanding      | 5,423               
|Dilutive effect of      |                     
|                        | common stock options
|                        | ------              
|Weighted average common |                     
|                        | shares outstanding  
|                        | ------              
|Net earnings per common |                     
|                        | share diluted       
|                        | ======              

7.  PROPERTY



On December 16, 2004 the Company announced that it had been awarded a five-year lease with the Navy for the use of the AFDM-10 Drydock, "Resolute." The Resolute is in transit from its current location in Virginia and is expected to arrive in Puget Sound in late August or early September of 2005 where Todd will take possession.



8.  PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS



Nonunion Pension Plan - The Company sponsors the Todd Shipyards Corporation Retirement System (the "Retirement System"), a non-contributory defined benefit plan under which all nonunion employees are covered.  The benefits are based on years of service and the employee's compensation before retirement.  The Company's funding policy is to fund such retirement costs as required to meet allowable deductibility limits under current Internal Revenue Service regulations.  The Retirement System plan assets consist principally of common stocks and Government and corporate obligations.



Under a provision of the Omnibus Budget Reform Act of 1990 ("OBRA '90") the Company will transfer approximately $1.6 million in excess pension assets from its Retirement System into a fund to pay fiscal year 2006 retiree medical benefit expenses.  OBRA '90 was modified by the Work Incentives Improvement Act of 1999 and subsequently updated April 10, 2004 by the Pension Funding Equity Act (HR-3108)to extend annual excess asset transfers through the fiscal year ending March 30, 2014.



|Pension Benefits                   | Three Months Ended                   
|---------------------------------- | -------------------------------------
|                                   | 07/03/05                             
|Components of Net Periodic Benefit |                                      
|                                   | Cost (in thousands of dollars)       
|                                   |                                      
|                                   | Interest cost on projected           
|                                   | benefit obligation                   
|                                   | Expected return on plan assets       
|                                   | Amortization of prior service cost   
|                                   | Recognized actuarial loss            
|                                   | ------                               
|                                   | Net periodic benefit before OBRA'90  
|                                   | Transfer of assets for payment of    
|                                   | retiree medical benefits (401(h)Plan)
|                                   | ------                               
|Net periodic cost                  | $  195                               
|                                   | ======                               



Post Retirement Group Health Insurance Program - The Company sponsors a defined benefit retirement health care plan that provides post retirement medical benefits to former full-time exempt employees, and their spouses, who meet specified criteria.  The Company terminated post retirement health benefits for any employees retiring subsequent to May 15, 1988.



The retirement health care plan contains cost-sharing features such as deductibles and coinsurance.  These benefits are funded monthly through the payment of group health insurance premiums.



Because such benefit obligations do not accrue to current employees of the Company, there is no current year service cost component of the accumulated post retirement health benefit obligation.

|Other Postretirement Benefits      | Three Months Ended                  
|---------------------------------- | ------------------------------------
|                                   | 07/03/05                            
|Components of Net Periodic Benefit |                                     
|                                   | Cost (in thousands of dollars)      
|                                   | Interest cost on projected          
|                                   | benefit obligation                  
|                                   | Recognized actuarial loss           
|                                   | ------                              
|                                   | Net periodic benefit before OBRA '90
|                                   | Transfer of assets for payment of   
|                                   | retiree medical benefits(401(h)Plan)
|                                   | ------                              
|Net periodic benefit               | $ (145                              
|                                   | ======                              



Union Pension Plans - Operating Shipyard



ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The Notes to Consolidated Financial Statements are an integral part of Management's Discussion and Analysis of Financial Condition and Results of Operations and should be read in conjunction herewith.

OVERVIEW

The Company derives a significant portion of its revenues from work performed under its contracts with the U.S. Navy and the U.S. Coast Guard.  Work under such contracts is scheduled by and at the convenience of the U.S. Navy and the U.S. Coast Guard. CVN work for the Navy and work on submarine contracts for Electric Boat contributed significantly to the amount of work done in the first quarter of fiscal year 2006.



Operating Results

All comparisons within the following discussion are to the corresponding period in the previous year, unless otherwise stated.

Revenue - The Company's first quarter revenue of $66.9 million reflects an increase of $34.8 million (108%) from the same period last fiscal year.  The quarter to quarter increase is primarily attributable to work for the Navy on the NIMITZ CLASS Aircraft Carrier USS STENNIS and work on submarines under contracts with Electric Boat Company.



The ship repair business consists of individual and short duration repair events, some of which are exercised by the Government under its various multi-ship, multi-option contracts.  Consequently, operating results for any period presented are not necessarily indicative of results that may be expected in any other period.



Cost of Revenue - Cost of revenue during the first quarter of fiscal year 2006 was $49.8 million, or 74% of revenue.  Cost of revenue during the first quarter of fiscal year 2005 was $21.4 million, or 67% of revenue.  The cost of revenue increase in the first quarter of fiscal year 2006 is primarily attributable to increased volumes.  Cost of revenue as a percentage of revenue increased by 7% during the first quarter of 2006 from the comparable period of fiscal year 2005. This increase is driven by higher subcontract costs as a percentage of direct costs, which have lower margins than costs incurred by the Company.  The increase in subcontractor costs is driven by increased work under the CVN and CMT contracts where team members perform significant amounts of work.



Administrative and manufacturing overhead expense - Overhead costs for administrative and manufacturing activities were $13.7 million, or 20% of revenue for the first quarter of fiscal year 2006.  During the same period of fiscal year 2005, administrative and manufacturing overhead costs were $9.0 million, or 28% of revenue.  The $4.6 million increase in administrative and manufacturing overhead is attributable to increased variable manufacturing costs driven by higher work volume during the first quarter of fiscal year 2006.  The decrease in administrative and manufacturing costs as a percentage of revenue is primarily attributable to the fact that a portion of these costs are fixed and only the variable costs increased with the increased volumes and revenue.



Income Taxes - The Company's effective tax rates of 34.1% and 35.5% in the first quarters of fiscal year 2006 and 2005 respectively.

LIQUIDITY AND CAPITAL RESOURCES



The Company anticipates that its cash, cash equivalents and marketable securities position, anticipated fiscal year 2006 cash flow, access to credit facilities and capital markets, taken together, will provide sufficient liquidity to fund operations for fiscal year 2006.  Accordingly, shipyard capital expenditures are expected to be financed from working capital. Changes in the composition or timing of projected work could cause planned capital expenditures and repair and maintenance expenditures to change.



In the long-term, the Company's liquidity could be impacted by default of its insurers on environmental or bodily injury claims. The Company however anticipates that it will meet its long-term liquidity needs due to its available cash reserves, ability to generate profits and lack of debt.



Working Capital

Working capital at July 3, 2005 was $47.8 million, an increase of $1.6 million or 3% from the working capital reported at the end of fiscal year 2005.  This increase is primarily attributable to current period net income.



Capital Expenditures

Capital expenditures for the first three months of fiscal year 2006 were $1.1 million and were attributable to planned improvements to the Seattle shipyard facility.



Credit Facility

Todd Pacific Shipyards Corporation ("Todd Pacific"), a wholly owned subsidiary of the Company, has a $10.0 million revolving credit facility available for its working capital requirements.  As of July 3, 2005 Todd Pacific had no outstanding borrowings on its credit line.  Todd Pacific is in compliance with all debt covenants.



Dividends

On June 23, 2005, the Company paid a dividend of 10 cents ($0.10) per share to all shareholders of record as of June 8, 2005.  The amount of the dividend paid was $0.5 million.



Also, on June 3, 2005, the Company declared a dividend of ten cents $0.10) per share to be paid on September 23, 2005 to all shareholders of record as of September 8, 2005.The estimated amount of this dividend is $0.5 million.



ENVIRONMENTAL MATTERS AND OTHER CONTINGENCIES

As discussed in Note 6 to the financial statements, the Company has provided total aggregate reserves of $21.7 million at July 3, 2005 for its contingent environmental and bodily injury liabilities.  As of April 3, 2005, the Company had recorded aggregate reserves of $26.7 million.  Reserves decreased by $5.0 million in the quarter for costs incurred for the work currently in progress on the Harbor Island sediments remediation. Due to the complexities and extensive history of the Company's environmental and bodily injury matters, the amounts and timing of future expenditures are uncertain.  As a result, there can be no assurance that the ultimate resolution of these environmental and bodily injury matters will not have a material adverse effect on the Company's financial position, cash flows or results of operations.



The Company has various insurance policies and agreements that provide coverage on the costs to remediate environmental sites and for the defense and settlement of bodily injury cases.  These policies and agreements are primarily with two insurance companies.  Based upon the current credit ratings of both of these companies, the Company anticipates that both parties will be able to perform under their respective policy or agreement.



As of July 3, 2005, the Company has recorded aggregate assets of $19.0 million related to its reserves for environmental and bodily injury liabilities.  As of April 3, 2005, the Company had recorded aggregate assets of $23.7 million. $4.9 million of the decrease of $4.7 million in these assets is a result of receipts for the Harbor Island remediation currently in progress offset by an increase in bodily injury insurance receivable of $0.2 million.  These assets reflect receivables under contractual arrangements with the insurance companies to share costs for certain environmental and other matters, as well as amounts deposited to securitize certain remediation activities.  Amounts recoverable from insurance companies are recorded within the Company's Consolidated Balance Sheets as insurance receivables and, in the case of reimbursements currently due, as a current asset.  Amounts held in security deposits are recorded within the Company's Consolidated Balance Sheets as restricted cash.



BACKLOG

At July 3, 2005 the Company's firm shipyard backlog consisted of approximately $29 million of repair and overhaul work.  The Company's backlog at April 3, 2005 was approximately $53 million.  The decrease in the backlog work at the end of the first three months of fiscal year 2006 is primarily due to the completion of certain work for the Navy on the USS STENNIS and the completion of certain work on the USS MOMSEN for Bath Iron Works.

LABOR RELATIONS

Todd Pacific Shipyards currently operates under the terms and conditions of a collective bargaining agreement with the Puget Sound Metal Trades Council (the bargaining umbrella for all unions at Todd Pacific Shipyards).  The three-year agreement was in effect from August 1, 2002 to July 31, 2005.  The Company is currently negotiating a new labor contract with the unions and, by mutual agreement, the current contract has been extended while the negotiations are underway.  Either party may terminate the extension with ten days' notice to the other party.  The Company believes its relationship with its labor unions is stable.



ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The Securities and Exchange Commission defines the term "disclosure controls and procedures" to mean a company's controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Our chief executive officer and our chief financial officer have concluded, based on the evaluation of the effectiveness of our disclosure controls and procedures by our management, with the participation of our chief executive officer and our chief financial officer, as of the end of the period covered by this report, that our disclosure controls and procedures were effective for this purpose.



(b) Changes in Internal Controls Over Financial Reporting. There have been no significant changes in our internal controls over financial reporting during the three months ended July 3, 2005 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS

(a)  Exhibits

|No. 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14a (filed herewith)                                                                                                                                              
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                 
|No. 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14a (filed herewith)                                                                                                                                              
|         |                                                                                                                                                                                                                                 
|No. 32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002(subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code. (furnished herewith)*
|         |                                                                                                                                                                                                                                 
|No. 32.2 | Certification of Chief Financial Officer pursuant to Rule 14(b) and section 906 of the Sarbanes-Oxley Act of (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code. (furnished herewith)*        
|         |                                                                                                                                                                                                                                 
|No. 99.1 | Press Release dated August 9, 2005 announcing financial for the Company's quarterly period ended July 3, (furnished herewith)*                                                                                                  



*Notwithstanding any incorporation of this Quarterly Report on Form 10-Q in any other filing by the Registrant, Exhibits furnished herewith and designated with an asterisk (*) shall not be deemed incorporated by reference to any other filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 unless specifically otherwise set forth therein.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TODD SHIPYARDS CORPORATION

Registrant









/s/Scott H. Wiscomb

Scott H. Wiscomb

Chief Financial Officer and Treasurer

August 8, 2005